Courthouse Steps Decision Webinar: California v. Texas

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's Practice Groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of Practice Group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Nick Marr:  Welcome everyone to this Federalist Society virtual event. Today, on June 23, 2021, we're having a Courthouse Steps Decision webinar on a case called California v. Texas, known as the Affordable Care Act case.

 

I'm Nick Marr, Assistant Director of Practice Groups here at The Federalist Society. As always, please note that expressions of opinion on our call today are those of our experts. We're glad to be joined today by two experts that are going to offer their differing views on a case. First, they're going to review the case. And then, as always, we'll be looking to you, the audience, for questions towards the second part of the program. So please submit those via chat or through the Q&A chat, and we can take them once we get to that portion of the call.  

 

I'm going to introduce both our speakers. Their longer biographies can be found on our website, but in the interest of getting right to our case, we'll start with Professor Jonathan Adler. We're pleased to have Professor Adler. He's a Memorial Professor of Law at Case Western Reserve University School of Law. We're also joined by Mario Loyola. He's a Senior Fellow at the Competitive Enterprise Institute. Again, their longer bios can be found on our website.

 

Well, thank you very much for being with us. Mario, we're going to start with you. I give the floor to you.

 

Mario Loyola:  Great. Thank you. Thank you to The Federalist Society. Thank you to all who are joining, and Professor Adler, great to be with you too.  

 

      This case, California v. Texas, is the third installment in the saga of the Affordable Care Act. The first two cases, of course, were NFIB v. Sebelius back in 2012, which was the major ruling on the constitutionality of the Affordable Care Act. And then there was an interesting case in 2015, King v. Burwell, which had to do with what appears to have been a significant drafting mistake or you would say a mishap in the evolving iteration of the law as it was drafted that led to a court correction.

 

      And now, we've got this case which resulted from a change in 2017 to the law itself in which Congress zeroed out the penalty associated with the mandate that individuals purchase health insurance, which was sustained as a tax in the first decision, NFIB v. Sebelius.

 

      So if we remember, the decision in NFIB v. Sebelius, the Court certified three main questions for briefing by the parties. The first of them was the constitutionality of the mandate that individuals buy health insurance or pay a penalty. The second of them was the constitutionality of the Affordable Care Act's mandate that states expand Medicaid to cover a significantly larger portion of the population than was originally covered by the Medicaid program.

 

      And the third of them was the issue of severability. And on the briefs on severability in that case, the question was whether the individual mandate was so inseparable from the rest of the law or certain provisions of the rest of the law that should the individual mandate be struck down as unconstitutional, those other provisions would also have to follow along with it, which to me is the most interesting aspect of this entire case and one of the most interesting and least explored aspects of Supreme Court jurisprudence, going back to Marbury v. Madison, which was a severability case, right? It struck down a very obscure section of the Judiciary Act of 1789, and ever since then, we've got this doctrine that out of deference to Congress, the Supreme Court will strike down only so much of an unconstitutional statute as is necessary to remove the unconstitutional part and leave the rest of the law in place.

 

      I'll leave for later in the discussion some questions that I have about that original decision because I've always thought the doctrine of partial invalidation is not a lesser included element of wholesale invalidation because it includes an element of legislation itself and leaves the country with a law that no Congress ever passed and that no president ever signed.

 

      But be that as it may, and we'll leave it to history to find out exactly what happened in those chambers as the justices were negotiating the original NFIB decision, we'll leave to history to find out what really happened there in terms of the negotiation between Justice Roberts, who appears to have initially been on the side of striking down the individual mandate as an invalid exercise of the commerce power. I think he may not have been able to reach agreement with the other conservative justices on the severability issue and was unwilling to strike down the rest of the insurance market regulations. And as a result, may have modified his position a little bit to be able to justify the individual mandate as an exercise of the taxing power, which is how we got here today.

 

      I'll say one more thing about the severability issue that's really important to understand the context for this case which is the argument for those people who argued that if the individual mandate was unconstitutional, at least Titles 1 and 2 of the Affordable Care Act should be struck down, which is the insurance market regulations. The essence of their argument was that as Congress was designing the Affordable Care Act, it was confronted with the consensus -- it had the consensus that a law that guaranteed issuance of health insurance to all comers and on top of that imposed a community rating provision that would have healthy people paying for the insurance of old -- young people paying for the insurance of older people, was more or less guaranteed to produce what's called the death spiral in the insurance market whereby healthy people wait until they're sick to get insured. The pool of insured goes down. The proportion of people who are sick goes up. The price of health insurance starts to approximate the cost of actually delivering care, and that accelerates into basically a collapse of the insurance markets which is what we saw in the case of the individual market setup during the 1990s outside of HIPAA by several states in the wake of the health insurance reform attempts of the Clinton administration.

 

      And so the idea is that you could prevent -- the idea that Congress has was that you could prevent the collapse of the insurance markets that would result from the insurance market regulations either by forcing people to -- either by forcing everyone to buy health insurance or by purchasing it for them. And in the end, Congress embraced both of the approaches. It included a mandate that everybody purchase health insurance or pay a penalty, and then it set up these exchanges whereby subsidies would flow through to healthy people, at least on the lower income side, to purchase insurance for them and thereby expand the pool of insured and forestall the collapse of the health insurance markets.

 

      Now, we had the case of -- now, the severability issue in the ACA was, of course, obviated by the fact that the majority in that case found the individual mandate to be sustainable as an exercise of the taxing power, which was a rabbit out of Justice Robert's hat that very few people saw coming because typically, the taxes are sustainable as a revenue raising measure but a tax penalty that's just a way to enforce an underlying commandment of some kind on non-circumvention grounds is typically viewed as an exercise of that underlying power. We know that because that's one of the surviving elements, at least until 2012, of the child labor tax cases in the related child labor cases.

 

      So in 2015, we had another assault on the law having to do with the fact that the exchange subsidies kept referring to state exchanges. And it appears only later in the iteration of the laws made as they got negotiated by Congress that federal exchanges were provided for for those states that established state exchanges. But the appropriations that were setup and authorized never referred to federal exchanges. They only referred to state exchanges. And so the idea was -- the challenge there was that money could not float through to the federal exchanges. It could only float through to state exchanges. The Supreme Court re-solved that controversy, that challenge, by ruling that the federal government qualifies as a state for purposes of the exchange related provisions of the Affordable Care Act.

 

      In 2017, as I said, congress, a now republican-controlled White House, a republican controlled Congress, zeroed out the mandate penalty but didn't eliminate the mandate from the law. And from this, the parties that ended up being plaintiffs or representatives of the plaintiffs in the current case came up with the theory that well, now if you have an induvial mandate that's not tied to a tax penalty of any kind, then the basis on which the individual mandate was originally sustained in 2012 has disappeared. So now the individual mandate is clearly unconstitutional and therefore, a series of individual plaintiffs and a series of states led by Texas brought suit to try to get that -- to try to basically do a do-over of the original ACA case, get the individual mandate overturned, and then push forward the severability argument that they hoped would have carried --

 

Nick Marr:  Welcome back everyone. Sorry about the technical difficulties on our end, and I'm sorry you got kicked off. Hopefully, you find your way back on or if you're tuning in later, hopefully, you find your way to the podcast reporting. And with that, Mario, sorry to cut off your train of thought. Go for it.

 

Mario Loyola:  Yeah. And just to wrap up, so the idea here for this case was that now that the individual mandate penalty has been zeroed out, the individual mandate and be declared unconstitutional. And then pushing forward with the original severability argument, the plaintiffs tried to convince the Court -- wanted to convince the Court that since the individual mandate could no longer be sustained, it had to be struck down and was inseverable from the rest of the law and the rest of the law should also be struck down.

 

      It was one major problem with that analysis, however, which we'll expound on in a moment, which was the entire original severability argument was predicated on the interaction of the mandate penalty with the rest of the law. And so there was a real problem in the plaintiff's case, it seemed to many of us, namely that now that Congress itself, by zeroing out the penalty, had largely undercut the argument.

 

      But anyway, here, I'll turn it over to Jonathan to go through the specifics of the decision in California v. Texas this week.

 

Prof. Jonathan Adler:  Great. Thank you, Mario, and it's a pleasure to be here. It's always great to be with The Federalist Society, even when we do it remotely.

 

      So in terms of this case, the district court had ruled in favor of the plaintiffs, both finding that they had standing that the constitutional -- the individual mandate without a penalty was unconstitutional and that it was inseverable from other portions of the law. The Fifth Circuit affirmed the first parts of the district court's holding on standing and on the constitutionality of the mandate but remanded the case back to the district court to do a more fine-grained analysis of the severability question but certainly, showing itself open to the idea that many other aspects of the affordable care act would be inseverable for the mandate.

 

      California intervened on behalf of -- essentially, on behalf of the Affordable Care Act because the Trump administration had effectively taken the side of the plaintiffs, and that's why this case was styled as California v. Texas. California filed the initial cert petition seeking review of the Fifth Circuit's opinion. Before the Supreme Court, just a tiny bit of disclosure, I was on an amicus brief with Professors Ilya Somin, Abbe Gluck, and Nicholas Bagley on severability question arguing that the penalty-less mandate was severable from the rest of the Affordable Care Act. I also blogged extensively on various aspects of the case on the Volokh Conspiracy.

 

      When the Supreme Court decided this case, the Supreme Court decided it 7-2 on the grounds of standing. And I should say at the outset that I think this was a correct disposition of the case, but certainly, it was not one that I anticipated, nor was it one that many commentators anticipated. But an opinion by Justice Steven Breyer joined by all of the justices except for Justices Alito and Gorsuch, the Court concluded that the plaintiffs did not have standing to challenge the penalty-less individual mandate because whatever injuries they may have suffered in the individual's cases of the injury of paying out of pocket for health insurance that would comply with the law and in the state's case, the other costs imposed on the states as employers and as states in complying with the Affordable Care Act, these injuries could not be traceable to the individual mandate.

 

      And the core rationale or the core we'd understand the Court's holding on this point is that the individual mandate no longer had any consequence to it. There was no longer anything the government could or would do to anyone who did not comply with it. Therefore, it could not be the cause of injuries that were sustained by the plaintiffs, even if those injuries were caused by the Affordable Care Act.

 

As Justice Breyer pointed out, a core element of standing is that not only that you have a concrete and particularized injury, but that that injury be fairly traceable to the unlawful act complained of. And that traceability, in the Court's view, was the primary deficiency in the arguments that were being made. And this opinion was joined by not merely the Court's Liberals but also Chief Justice Roberts, Justice Kavanaugh, Justice Barrett, and Justice Thomas.

 

      Justice Thomas wrote separately to note that while he agreed fully with the concerns that Justice Alito expressed in dissent and that many of us who have been critical of the Affordable Care Act had about the Court's prior decisions in NFIB v. Sebelius and King v. Burwell, he felt that in this case, the Court did reach the proper conclusion and that standing that had not been demonstrated.

 

      Justice Alito joined by Justice Gorsuch dissented on the standing point and then went on to conclude that the individual mandate without a penalty could no longer be justified as an exercise of the Congress's taxing power and was therefore unconstitutional and that if it were unconstitutional, it was inseverable from the rest of the Affordable Care Act, largely because of the findings of the laws that were included in the Affordable Care Act was enacted in 2010 and the fact that when Congress eliminated the penalty for the mandate, it did not eliminate the language imposing the mandate itself. And as already noted, this is a conclusion that I was on an amicus brief arguing the Court should not reach.

 

      One last bit on the Court's holding on standing that's worth noting. Justice Alito's argument that there should have been standing was based on a theory slightly different than that which had been argued by the individuals or by the states before the Supreme Court and was rested on a theory that Justice Breyer's opinion did not really address. And that is the idea that the alleged inseverability of the mandate from the rest of the statute should be a basis for standing because the injury that Texas, for example, was claiming was not an injury from the mandate but an injury from the Affordable Care Act and that the Affordable Care Act was a hole, well, then an injury caused by the Affordable Care Act would certainly be traceable to the Affordable Care Act and redressable by a judgment that invalidated the Affordable Care Act.

 

      My own view is that it would've been nice if the majority had addressed this point. I think it's a close call, as Justice Thomas noted in his separate concurrence, whether or not this particular argument had been waived by the parties. It had been brought up in oral argument. It had been raised by the Justice Department, and certainly, it had been implicated by arguments. I went back and noticed that in writing about the standing issues in this case in blog posts going back to 2018, this question of whether or not alleged inseverability could be a basis for standing certainly had been implicated in the arguments that had been raised in various points in litigation.

 

      My own view is that these arguments would not council a different result, that standing by inseverability as a general matter does not work because the action in question is the provision of the law in question that is being challenged. So for example, the restaurant that doesn't like complying with the calorie disclosure requirements of the Affordable Care Act could not point to the mandate and say oh, we don't have to comply with the calorie count requirements because of the individual mandate. It's unconstitutional. The whole law is inseverable. If that was a way that claimants could get into court, then every large statute that Congress enacts would be vulnerable to challenge on this basis.

 

      Rather, what the Court I think has fairly consistently done is look at whether the allegedly unconstitutional provision of the law plays a role in the injuries that are being alleged. So for example, if the claim is that an agency is unconstitutionally constructed like the CFPB, well, that certainly implicates anything that the CFPB is doing because the entity taking the acts is not lawfully constructed, is not lawfully exercising power. That doesn't require standing by inseverability. It's still looking at the same question of what is it that is causing the injury in question. But in a case like this, if the alleged constitutional infirmity of the statute is a provision of law that has no legal effect, it imposes no consequence on anyone who violates it, the federal government cannot enforce against anybody, then traditional standing doctrine, the way it's been applied in Court, would say there is no standing.

 

      So for those reasons, I think the Court was correct in its decisions even if Justice Breyer's opinion could've gone a little bit farther in explaining the rationale behind that. So that's what the Court did, why I think it's correct. I'll now turn it back over to Mario who I think wanted to talk a little bit more about severability.

 

Mario Loyola:  So I think -- thank you, Jonathan. That was a great summary. I think the difficulty of this standing on the basis of inseverability argument is, as Justice Thomas points out, as Professor Adler pointed out, that [was] insufficiently developed by the courts. Part of the reason that I believe that this theory of standing has not been sufficiently developed by the courts is precisely because the doctrine of severability has not been sufficiently developed by the courts in the sense that you had from the late 19th Century and early 20th Century severability cases, a long period of time, many decades, where virtually no law of Congress was struck down as unconstitutional and severability never really came up.

 

And so severability really doesn't come up again after the new deal until the cases in the, I guess, the 80s. Alaska Airlines being the modern encapsulation of the doctrine of inseverability which required that in going back to the older cases but I believe but not quite reading them closely enough, that a portion -- an unconstitutional portion of a law could be struck down as long as the remainder was operative as a law in the way that Congress intended and Congress and the court could be confident that Congress would have enacted the rest of the law without that offending portion.

 

      That series of doctrines to me is problematic. If you think about Marbury v. Madison, in that case, we were talking about a provision that really was unrelated to the rest of the law. And so you have several questions here. The first of them for people to ponder is whether partial inseverability is really more deferential to Congress than wholesale, or partial invalidation is really more deferential to Congress than wholesale invalidation.

 

      I would say that there's an argument to be made that wholesale invalidation is more deferential to Congress because partial invalidation does something that wholesale invalidation doesn't do, which is that it leaves the country saddled with a law that no Congress ever passed and no president ever signed. And there's a good indication of this from the modern's doctrine's second prong which is would Congress -- which is that it requires the Court to go into speculation about what Congress -- whether Congress would've enacted the remainder without the offending part. And there's of course absolutely no way for the Court to know that.

 

      And so the key thing to note is that, again, partial invalidation is rewriting a law to make it palatable for constitutional review from the Constitution's point of view. That clearly has a legislative aspect in addition to a judicial. And if you view it from the point of view of separation of powers, I think it's proper to view partial invalidation as a different kind of power, not just a lesser included element of wholesale invalidation.

 

      And so for me, I would say that as a list of serious questions that's raised by the opinion in Marbury v. Madison, whether it's really so deferential to Congress to just strike down one small part of a law as opposed to invalidating the whole thing. Now, let's assume that as the concession to reality would've been incredible to strike down the entire Judiciary Act because one particular clause of it happens to be offensive. So let's say Marbury v. Madison is correctly decided for the reason that the offending aspect of the law could have easily passed as a stand-alone provision and really had absolutely nothing to do with the rest of the Judiciary Act of 1789 which established the federal court system as we know it today.

 

      Okay, still, we have in the current situation, in the current case, we have a situation where the individual mandate penalty clearly was not severable from the insurance market regulations. The only thing that the individual mandate penalty was doing there was to prevent the insurance market regulations from having what otherwise would've been disastrous effect, understood by all sides of Congress because they had just seen it happen in the state markets outside of HIPAA during the 1990s.

 

So now, the interesting thing -- the difficult question arises that when Congress revisits this in 2017 and zeros out the penalty, it's almost as if -- and here's where I see the real problem with Alito's dissent is that Alito is saying okay, now we have the individual mandate, can't be sustained as an exercise of the taxing power anymore. It's an invalid exercise. It's a commerce power, and we're going to -- and it's inseverable because the law now cannot operate as Congress intended in 2012.

 

      Well, the difficulty with that is that Congress, by zeroing out the individual mandate penalty in 2017, has essentially rewritten the law. So now, you have a sort of sophistic question which is whose congressional intent are we talking about? The Congress in 2012 or the Congress in -- the Congress in 2010 or the Congress in 2017? And to me, it seems very difficult to dispute that.

 

By zeroing out the mandate penalty, Congress decided the issue and basically decided that the individual mandate could be severed from the rest of the law because that's exactly the law that they left us with is a law that had all these insurance market regulations and did not rely on a substantial individual mandate penalty to prevent the death spiral that policy experts and congressional staff and congressmen were expecting would happen in the individual market in 2012 -- in 2010 when they originally passed the law.

 

      And I think what happened is that -- what has happened as, speaking now as a sort of health policy -- from a health policy point of view is that the exchange subsidies proved robust enough to prevent that death spiral from happening. So it turned out, in fact, that the individual mandate as a matter of fact was not necessary to prevent the death spiral even though insurance rates rose dramatically.

 

      So I think this case, to me, is as interesting as the first decision was back in 2012, this case, to me, is really annoying at several levels, not the decision itself but the case itself. And almost seems more apt for a Socratic dialogue on the nature of law than for a Supreme Court decision because if we're talking about a challenge to an individual, as Professor Adler alluded, we're talking about an individual mandate that's a nothing. It's a commandment that's not tied to any kind of penalty, so is it even really a law, right?

 

      We have judicial philosophers that I studied in my jurisprudence class and Congress that would even say that this is not really a law because you don't have any change in legal status resulting from a violation of the individual mandate. So what is this thing even doing then?

 

      And so for the same reason, I think the standing -- because of that fact, all of the rest of this is sort of a very sophistic academic argument that's interesting for academic purposes. But I think the two main takeaways here that really matter going forward is first of all, that now we know, if anybody could have standing to prove it, that the individual mandate is unconstitutional for sure. If anybody could have standing to challenge this in court, we'd know that the court has now -- we know that the individual mandate would now be resting only on exercise of the commerce power, and we know that that was rejected by a majority of the Supreme Court in 2012.

 

      And the other aspect of this case that to me is very interesting, especially in an era where we can expect more of these really comprehensive laws that try to regulate whole slots of the economy, is the problem of severability. And I hope that the Supreme Court will get back to the severability doctrines of the late 19th Century and early 20th Century, which were really ones that required that the individual -- that the part to be struck out be really unrelated to the rest of the law in order for the rest of the law to survive.

 

      And with that, I guess I'll be quiet, and I look forward to questions.

 

Nick Marr:  So let's see. We don't have any questions right now in the queue.

 

Prof. Jonathan Adler:  I'll jump in just to say a little bit about severability. Mario and I, I think, agree on severability in this case. I think we disagree quite profoundly on what the court actually should do on severability, so let me say a little bit about both. And then if we don't get questions, then maybe Mario and I can debate Marbury.

 

      So in terms of this case, I think -- and certainly the brief I participated in, what we tried to do in that brief is to show that no matter how one approached severability, whether one used the 20th Century tests that have been articulated in recent cases or if one used the more originalist approach that Justice Thomas, for example, has advocated in some separate opinions, you reach the same place in this case.

 

      And so the reasons for that are a couple things. First of all, I would argue, you look first and foremost to what Congress did. And if Congress rendered the individual mandate an operable portion of the law, something that is neither enforced nor enforceable, then one cannot say that Congress created something that is necessary to the rest of the law's function.

 

      Secondly, if one wants to look at other signs of congressional intent, you have to find quite a bit of evidence to overcome what Congress did. As someone who's a textualist, as someone who focuses on what Congress does as opposed to what individual members of Congress say, I think this is particularly important.

 

      Now, Justice Alito in the plaintiff's point threw the findings. And there were findings in 2010 that said the mandate was an essential part of the law. And that was certainly significant in NFIB but I don't think those findings can carry the weight that Justice Alito would put on them and I say that for a few reasons.

 

      First, as we all know, those findings were written not about severability but about the Commerce Clause. Those findings were inserted into the Affordable Care Act as Congress's attempt to buttress the Commerce Clause rationale for the mandate. And if you read the language, if you look at where they are and the other findings that surround what about the mandate, that's clearly what Congress is doing.

 

      Secondly, these are findings that are expressly about the law as it was enacted in 2010. They were about a law that had a penalty that would serve to create incentives, to get people to purchase insurance they would not otherwise purchase, as Mario described earlier. So the findings are talking about something that no longer exists.

 

      See, even if we think those findings carry some weight in the severability analysis, they're talking about a different law. Congress not only threw out the mandate, Congress has made multiple other changes to the law, including changes to the Independent Payment Advisory Board, another constitutionally problematic part of the Affordable Care Act as initially enacted. And if we're going to evaluate how the law operates today, we need to account for the fact that the law today, the law as reformed in 2017, is not the law that the findings were written about. That law has changed.

 

      And to hold otherwise is to basically say that prior congresses can tie the hands of later congresses, and that's hugely problematic on a bunch of grounds. But on top of that, we actually know that when Congress wants to write inseverability provisions, it actually does so. Abbe Gluck at Yale did a paper showing that Congress has never used findings as the basis for inseverability clauses, that when Congress wants to make something inseverable, it says so. So if claimant's findings aren't tantamount to that is to claim that Congress does not act in the way that we know Congress acts. So it's another reason that doesn’t work.

 

      Finally, I should say, and this is where Mario and I disagree, I view the severability analysis as in some respects starting on the wrong foot. And the reason I say that is that in general, when we think about what the nature of the judicial power is, it's not the power to invalidate laws, it's not the power to strike things down. It's the power to decline to enforce things that cannot be enforced constitutional. If you want to look at Chief Justice Marshall's opinion in Marbury, that's the way he describes what the Court's obligation is, to look at the statute, look at the Constitution, and insofar as they can flick, to simply refuse to give effect to the infirm portions of the statute.

 

      And I think that's actually the way the Court should approach severability. That's also a way for the courts to in fact provide redressability to those who are actually injured by the allegedly unconstitutional act. Here, the Court declined to enforce the individual mandate. We'd simply do what Congress has already done, decline to impose any consequence on those who do not purchase qualifying health insurance.

 

      In Marbury v. Madison, I think that was what the Court did there, and I think properly so. It declined to give effect to the federal statute, the portion of the Judiciary Act that purported to provide jurisdiction that were in conflict with the Constitution. Where this approach to severability gets really interesting and perhaps challenging is where you have something like the Consumer Financial Protection Bureau which, as the Court concluded in Seila Law, was structured unconstitutionally, and then I think this approach to severability might well council that no court should give effect to anything the CFPB does until that constitutional infirmity is fixed.

 

      And so this approach to severability in some contexts might call for remedies that appear more robust than we've seen in a lot of recent cases. But in a case like this, this approach simply declined to enforce something that cannot be enforced constitutionally gets you to the same place as the do what Congress did or would have done. They both reach the conclusion that a provision of law that has no practical effect should not be given practical effect by the courts either directly or through a severability analysis.

 

Mario Loyola:  So just in response to that, I know that you're really -- and for any law students that are listening in, you're really going out on a limb when you challenge Marbury v. Madison as potentially wrongly decided. And I'm aware that -- and I just raised the question as a conceptual question. I think it's important to think more about this point that Professor Adler has spent a couple minutes talking about which is what is the court doing when it exercises its power of judicial review?

 

      And I don't think that there's that much of a difference. There's not as much of a difference as Jonathan sees between what I refer to as invalidation and what he refers to as refusing to give effect to a particular part of the law.

 

      Let's think, for example, about what would've happened if the case in 19 -- in 2012 had ended up the way that I believe Justice Roberts wanted it to wind up, which is to strike down the -- so I believe, I know I don't have any particular expertise or knowledge on this, but I have the impression for a long time that the result that Justice Roberts wanted was to strike down the individual mandate as exceeding the commerce power but then come up with the severability analysis that says that the rest of the law is severable and can operate the way that Congress intended.

 

      And because he couldn't get enough votes for the second part of that, that made the first part of what he wanted to do untenable because it wasn't going to have the ultimate consequence that he thought was the right one. That's purely speculative, but let's ask as a hypothetical, let me ask you, Jonathan, what you would've thought of that result in the original case where the individual mandate gets struck down and then a majority of the court says well, but the rest of the law is operative and can operate in more or less the way that Congress intended. So we'll leave it in place. Would you think that that result would have been defensible?

 

Prof. Jonathan Adler:  The interest there is possibly. So I think that what I think would not be defensible is to say that all portions of the law, whether connected to the mandate or not, including some of the P4s and fiscal gimmicks that were included to get it passed are all a known void on the basis of the individual mandate. I think that would be the court reaching things that were not before it and indeed reaching things that it did not have jurisdiction to reach because some aspects of the law would not be tied to the injuries that the plaintiffs complained of.

 

      So then the question is would it have been okay if the court to simply say the federal government may not enforce any portion of the law that affects any of the state's or private entities that were part of the suit. And there, I think the answer is that would also probably not have been the right response because not all of those provisions of the law were responsible for the injuries that were the basis of the court's jurisdiction to consider the individual mandate.

 

      I think where it becomes difficult is whether or not the mandate should've been seen as severable from the other regulations of the individual insurance market, guaranteed issue and community rating provisions. And the Obama administration's position had been that those are inseverable. And I think that those were arguably inseverable because the functioning of the mandate in the injuries caused by the mandate were interrelated with those other provisions.

 

      And so I think there, it's quite possible that an originalist approach to severability would've said that all of those would've been rendered unenforceable because of the mandate's unconstitutionality. And the analogy I give, there's an old case Brock v. Alaska Airlines, which is a case where the court actually talked about some of these questions a little bit. And this was a case involving the old unicameral legislative veto that we study when we read INS v. Chadha, in either your constitutional law class or your administrative law class.

 

      And there, the airlines didn't care about the legislative veto, they cared about regulations. They were suing the regulations, and they claimed the regulations were invalid because they were promulgated through provisions that contained the unicameral veto. And the Court said that was okay and then struck down those provisions.

 

      And I think there's an argument that the individual insurance market regulations of the Affordable Care Act's connection to the individual mandate will like to the situation in Brock v. Alaska Airlines, whereas the rest of the Affordable Care Act would not have been and that there would really be no way for the courts to refuse enforcement of the mandate without refusing enforcement of those other provisions. But I think it is a complicated case.

 

      To come back to our current case, I don't think the analysis is particularly complicated here because Congress had already made the individual mandate -- had already isolated it from the operation of the rest of the statute by zeroing out the mandate.

 

      The other thing I'll just throw out, and I have a blog post on this which points this out, is that if one takes the opposite view with regard to the current case, if one believes that the existence of the findings in the Affordable Care Act and the fact that all Congress did was zero out the penalty without erasing the actual mandate language from the Affordable Care Act, if one believes that that rendered the entire statute infirm, then the Republican replacement for Obamacare that the House passed and that the Senate came within a vote or two of passing—you may all remember the dramatic day when Senator McCain said he wasn't going to vote it in—that law, had it passed, it would have been unlawful as well because that law would've been adopted through reconciliation.

 

Through reconciliation, there was no authority to remove the findings, no authority to remove the mandate part of the mandate. There was only authority to zero out the penalty. That is in fact what the Republicans in the House did. That is what almost all the Republicans in the Senate were willing to do.

 

      So under this logic, not only would the Affordable Care Act fall as it stands now, but had the republicans been successful in their repeal and replace legislation, it would've had to fall as well. And I think we'd all recognize that that borders on absurdity and would not be a proper application of any severability doctrine that purports to base itself on what Congress did or sought to do.

 

      And that was a long answer because I didn't see there were any questions in the queue.

 

Nick Marr:  Yup, still no questions and I've got one and would like to ask this. What did you find most surprising about either the decision or the opinion or the breakdown, whatever, and then how did the result track your expectations coming out of the oral arguments?

 

Prof. Jonathan Adler:  I'll just chip in real quick. I'm not surprised that Texas lost. I'm not surprised that it was 7-2. I was surprised that it was on standing. I was surprised that Justice Breyer wrote an opinion rejecting standing because Justice Breyer loves standing. He likes finding standing for all sorts of things. He wrote some really broad opinions like FEC v. Akins, one of the broader standing opinions out there. He joined the Court's majority in Massachusetts v. EPA. So I'm surprised to see him writing a standing opinion.

 

      I went to the Supreme Court's webpage and I saw the B next to California v. Texas, I assumed it would be a severability holding. I will say, I'm also surprised that Justice Gorsuch joined Alito's opinion, particularly given the parts of Alito's severability analysis that rests so much on legislative history and in fact a selective assessment of legislative history. That just seemed to be quite out of character for Justice Gorsuch to join that part of Alito's opinion.

 

Nick Marr:  Mario?

 

Mario Loyola:  Yeah. So I agree with what Jonathan just said. And I'll say something that was not surprising at all to me in the least,\ which I think is one of the takeaways that hasn't received nearly as much attention as it deserves from this case, which is that Amy Coney Barrett voted against the Texas case to uphold the law. I think it was one of the most shameful aspects of the campaign to derail her nomination to the Supreme Court was this assumption that she would come up with some way to vote against the ACA on political grounds. I will say shameful and ignorant because in order for her to have voted against the ACA in this case, she would've had to go out on a limb doctrinally on several issues where she's just never done that before.

 

      And it's quite obvious from -- she's a conservative, obviously. She's a textualist and an originalist, but it's quite obvious that she's in the mold of a Kavanaugh where she's not going to necessarily -- especially not in her first year on the Court or in her first cases on the Court, go out on a limb and push for a dramatic change in the Court's approach to some important area of the law, which is what would've been required here.

 

      I think that for example, the idea that is not fully developed, it was not nearly at all touched on by the parties and it's not really fully developed by Alito's dissent, is this idea of standing to sue in severability. I mean, the more you think about what he's saying there is, what it really is getting to is a very strict doctrine on severability that says if any individual -- if any part of the law is unconstitutional, then your injury can -- then you can challenge the law even though your standing is based on some other part of the law.

 

And that's a very weird doctrine which you would want to see a lot more developed from because of course, you have not just the problem of traceability but also redressability there when you think about it because what is the person doing challenge -- how can a person be injured by something that is not unconstitutional in a case that's a constitutional challenge to a law?

 

      So I just think that this is -- these are some very problem -- another annoying thing about this case to me is that it brings together three strands of jurisprudence that the federal courts have gotten arguably wrong in important respects over the last half century or century. First is standing. Second is the extent of the commerce or taxing power and the third, severability.

 

      On standing, I'll say that standing is one of these doctrines like standards of review where it really seems like the courts often just pick one version or another of the standard depending on whether they like the plaintiff or don't like the plaintiff. And so I'll just throw it out there. If you could do a statistical analysis of these cases, whether it's standard of review of standing, and you would see a lot of results that would not be surprising just on political grounds. And it's sad to say.

 

      On the commerce and taxing power, we have left unaddressed now what should be the most interesting part of this which is -- or one of the most interesting and impactful issues which is whether you can enact a policy that's not sustainable on the basis of the commerce power but is sustainable on the basis of a tax penalty because that was in the ACA case, in NFIB v. Sebelius from 2012 from a very long-standing doctrine on non-circumvention.

 

      And then finally, on severability, I'll just say one final word on this which is that one of the most interesting aspects in how Supreme Court doctrines evolve is how one justice, even sometimes in dissent, will describe the holding of a previous case. And I think you'll see that if you start with Alaska Airlines, you'll see that there's been some evolution in even how the Supreme Court describes its own doctrine of severability since Alaska Airlines. Alaska Airlines talked about whether the remainder of the law after a portion was struck down would be operative as a law, which was not the early 20th Century standard which required that it be operative as a law in the way that Congress intended.

 

Whereas now, Justice Alito, trying to snatch maybe a future victory from the jaws of defeat, has described the rule on severability as, if you look at his dissent, he describes the rule on severability as turning on whether the remainder will operate in the way that Congress intended. And that is not what Alaska Airlines said and is much closer to what I would think is a correct doctrine of severability than what we've seen in the modern cases.

 

Nick Marr:  Well, very good. No questions. I suppose we covered everything. There's nothing left out there. So we have about six minutes left. I'll need to open it up for any remaining comments, any issues you didn’t get to, or any questions you'd like to ask each other. Otherwise, maybe closing remarks and we can wrap up a little bit early this afternoon. I leave it to you.

 

Mario Loyola:  Jonathan?

 

Prof. Jonathan Adler:  Yeah. Well, one other comment that I'd make, and I think it's important in terms of thinking about putting the statute in this case in perspective, is that this case does not mark the end of Affordable Care Act litigation. I do think it is the last case that will reach the Supreme Court that threatens to tear down all the large portions of the Affordable Care Act. But it would be a mistake to conclude that that means we are not going to continue to see Affordable Care Act litigation, including cases that reach the Supreme Court.

 

      The reality is that anytime Congress enacts a law of this size, scope, complexity, and cost, there is ample incentive to litigate. You combine that with the fact that so many portions of this law are rickety that will require an ongoing administrative implementation, that creates additional openings and incentives for litigation. And then add to that both the fact that we're talking about a subject that is very dear to many people, not simply healthcare and health insurance but also the broad range of moral and even religious values that a government policy in this area implicates. That is yet another reason why people will seek litigation in defense of their rights or in defense of their moral priors.

 

      And then add to that the fact that the Affordable Care Act was passed the way that it was, a way that guaranteed that the Affordable Care Act would continue to be a political sticking point. I've written an article that this created a perfect storm for ongoing litigation. So we will continue to see litigation over the contraception mandate, over what sorts of care should or should not be covered, over what sorts of reimbursement you get, over what exchanges may or may not be allowed to do, about what sorts of waivers states may or may not be eligible for under Medicaid and so on.

 

      This litigation will continue, and in fact, Judge O'Connor who wrote the district court opinion in California v. Texas, district court opinion that I've been very critical of, has before him another case that raises very strong separation of powers and constitutional challenges to the mechanism through which the federal government identifies those preventive services which must be covered by all private insurance policies.

 

And so he may be issuing rulings shortly on another case which raises some very serious legal questions. Again, not questions that are going to threaten all the Affordable Care Act but certainly questions that are serious, that involve serious legal claims, serious constitutional claims, and that will affect the operation of the Affordable Care Act on the margins.

 

      So just as we continue to see ERISA cases with some regularity before the Supreme Court or Clean Air Act cases or CERCLA cases before the Supreme Court with some regularity, we're going to continue to see Affordable Care Act cases before the Court. They won't be, again, these sorts of universal challenges, but they will raise often difficult and complicated and important legal issues. And unless Congress does something to change the way the federal government approaches health insurance and healthcare, it's litigation that we'll see for some time to come.

 

Mario Loyola:  Thank you. Yeah, that's a -- those are very interesting points. I would just add that this case is interesting from an academic point of view to think about the two major doctrines involved, standing and severability, are ones in which the court's modern articulations have been arguably shaped substantially by prudential concerns.

 

It doesn’t want to give too many people standing because then everybody will sue when the law gets passed. It doesn't want to require wholesale invalidation when there's only one small part of the law that's unconstitutional because otherwise, you'll be striking down big laws of Congress over a single sentence. Those prudential concerns have to be weighed against some of the more conceptual problems that we see.

 

Some of the more conceptual questions raised by these doctrines, in the case of standing, it's very weird -- there's something very weird, isn't there, about saying that you can challenge an unconstitutional statute if it hurts you in a particular way but not if it hurts everybody. And then if it hurts everybody, nobody has standing to challenge it. There's something very weird about that.

 

The answer is well, if everybody's hurting the same way, then they can address it through the political process. But the political process is not a stand in for the judicial process, and there are things that the courts can do that no amount of consensus in the legislature can do. So I think that even though under the standing doctrines as we know them today, the court reached a defensible result, we have to ask whether those standing doctrines are indefensible especially in a world where, for example, environmental advocacy groups routinely establish standing to stop major infrastructure projects simply by saying that they enjoy the view.

 

Now, on the severability question, again, I think it's very important to consider -- I think we're entering a period in the constitutional history of the United States where the court and the federal judiciary are going to be looking at questions of separation of powers much more carefully. And I think it's important to ask, and I think Justice Scalia, for example, was starting to wonder towards the end of his life on the bench, whether there isn't something about rewriting a law of Congress that is a violation of the separation of powers in a way that striking down entire laws unconstitutional is not.

 

To the extent that that ends up cooling, to the extent that the effect is that Congress be more hesitant to enact laws that seek to comprehensively regulate one-eighth of the economy, to the extent that it's more hesitant in its exercises of the commerce power or taxing power because it's afraid that one mistake could let it -- could get the entire law struck down, well, that's the world that agencies live in with respect to NIPA. It's a world that a lot of us live in, and it would not be -- devices for cooling legislation are a fundamental design aspect to the Constitution as we know from that story where George Washington explains the existence of the Senate to Thomas Jefferson by telling him that just like you pour coffee into your saucer to cool it, we created a Senate to cool legislation.

 

So I think that those prudential concerns can be weighed against other more important constitutional concerns. And now that we have a new generation in the federal judiciary, these are all areas where doctrines can continue to evolve in in unexpected ways.

 

So with that, thank you. Thank you, Jonathan. Thank you, FedSoc, Nick, and everyone else. And thanks everyone who joined. A pleasure to talk about all this. 

 

Nick Marr:  Well, thank you all very much. And on behalf of The Federalist Society, I want to offer our special thanks to our panelists. Professor Adler, Mario, thanks for joining us. Thanks for the benefit of your time and your expertise, of course, to our audience for calling in. As a reminder, we welcome your feedback by email at [email protected].

 

Again, apologies everyone for the technical difficulties. Glad you found your way back. This will be posted as a podcast. We'll run the audio together so you should be able to get the whole thing, and we'll send that out when it's up. Be checking your email and our website for announcements about upcoming events like this one, especially with all these court decisions coming out, we've got coverage of all of them winding up in the next week or two. So thank you all for joining us. Until that next event, we are adjourned.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.